Hydro-Québec, Summary 2013. Sustainability, our growth model.

SUSTAINABILITY

OUR GROWTH MODEL

SUMMARY 2013

OUR GROWTH MODEL

Supplying clean energy enhances quality of life. Meeting people’s electricity needs

in a sustainable way is very important. It is also crucial to use resources wisely

and preserve the quality of the environment for future generations. Québec long

ago opted for hydroelectricity, a clean, renewable energy source with known,

well-controlled environmental impacts. Today, Québec is actively involved in the

fight against climate change in North America.

Hydro-Québec has a sustainability vision—its growth model—that goes well

beyond the environment. We endeavor to see that stakeholders participate in

our decisions. We are also determined to contribute to the province’s economic

vitality.

At the Îles de Varennes, 315-kV and 735-kV transmission lines span the Saint-Laurent (St. Lawrence River).

CLIMATE CHANGE

In large part due to its size, climate and resource-based economy, Canada is among the

five major industrialized countries with the highest GHG emissions per capita. According

to the most recent data, the electricity sector accounts for 13% of these emissions. In

Québec, the electricity sector represents barely 0.7% of the province’s emissions, thanks to

the abundance of water. Over 99% of Hydro-Québec’s output comes from hydropower.

EMISSIONS AVOIDED

Using clean, renewable elec-tricity such as ours means that buyers avoid using power generated by fossil fuels. The result in 2013: emissions of nearly 9 million tonnes of CO2 were avoided thanks to Hydro-Québec’s net exports.

The La Grande-3 development, in the Baie-James region: The enlightened choice of clean, renewable energy is supported by vast hydropower resources.

0.7%

DEMAND-SIDE MANAGEMENT

Quebecers are the world’s second-largest consumers of electricity, after Icelanders. This

is mainly attributable to strong demand in the industrial (aluminum, pulp and paper,

etc.) and residential (home heating) sectors.

Since 2003, the year the Energy Efficiency Plan (EEP) was introduced, we have

invested close to $1.8 billion to help our customers save energy. The 2013 budget

totaled $174 million, including contributions to Bureau de l’efficacité et de l’innovation

énergétiques projects.

In addition, we have adopted new strategies to educate and support our customers.

By seeking lasting behavioral changes, we hope to transform the market and achieve

long-term energy savings.

ENERGY SAVINGS

In 2013, the EEP generated energy savings of 619 GWh. Since 2003, combined savings have totaled 8.5 TWh—equiva-lent to the consumption of 485,000 Québec households.

On January 22, 2014, electricity demand reached a historic peak of 39,240 MW.

$174 million

ENERGY PORTFOLIO

Hydro-Québec is one of North America’s largest producers of electricity. To meet demand,

we count on our own output and that of independent power producers (wind, biomass

and small hydro). We operate 61 hydroelectric generating stations and 26 thermal power

plants, with a total capacity of 36,068 MW. Most of our thermal facilities are not connected

to the main grid; they account for less than 0.2% of our total electricity output.

GREATER CAPACIT Y

When completed, the Romaine complex will comprise four generating stations with a total capacity of 1,550 MW. The first facility, Romaine-2, will soon go into operation, adding 640 MW to our energy portfolio.

Romaine-1 jobsite. Concreting of the upstream portal for the temporary bypass has begun.

0.2%

Conditions at the fish pass built at kilometre point 207 on the Eastmain support upstream migration of all species concerned (walleye, suckers, northern pike and lake sturgeon).

We continued our follow-up on special-status or special-interest bird species living close to our facilities. One of our goals is to monitor changes in the great grey owl population.

ENVIRONMENTAL PROTECTION

HIGHLIGHTS

We helped protect some 15 at-risk wildlife species in Québec.

Eight buildings earned BOMA BESt certification, which assesses the environmental performance and management of commercial buildings.

ACCEPTABILITY AND SPINOFFS FROM PROJECTS AND OPERATIONS

To get the green light, all Hydro-Québec

projects must meet three conditions:

they must be profitable, environmentally

acceptable and favorably received by

the host community. To achieve this,

we work with communities affected by

our construction projects and business

activities. We also work with stakeholders

to find the best project variants from social,

environmental and economic standpoints.

TOGE THER, WITH THE REGIONS

Economic spinoffs from the Eastmain-1-A/Sarcelle/Rupert project, which was completed this year, total $2.9 billion for Québec as a whole, including $640 million for the Nord-du-Québec region.

$6.6 billionHYDRO-QUÉBEC’S CONTRIBUTION TO THE QUÉBEC ECONOMY IN 2013

Procurement from Québec-based companies

$3,370 million

Public utilities tax

$245 million

Dividend $2,207 million

Municipal and school taxes

$36 million

Water-power royalties

$669 million

Community investments $31 million

RESPONSIBILITY FOR ELECTRICITY SERVICE

Hydro-Québec maintains high-quality service at affordable rates by putting substantial

efforts into its power system. In 2013, we invested more than $1.9 billion in the reliability

and long-term operability of our facilities. With the rollout of next-generation meters, we

have laid the groundwork for a smart grid with undeniable environmental, social and

economic benefits.

We also continue to support low-income

customers who have difficulty paying their

electricity bills. Every year, thousands of

customers benefit from special long-term

payment arrangements.

TOGE THER, WITH OUR CUSTOMERS

We reached 66,913 long-term arrangements ($294 million) with low-income customers; 19,232 of these agreements ($19 million) provided assistance with pay-ment of arrears and, if necessary, for current electricity use.

Jean-Simon Désilets installs a next-generation meter. As at December 31, 1,136,000 of the new meters were in operation.

$1.9 billion

TECHNOLOGICAL INNOVATION

Hydro-Québec’s research institute, IREQ, has an annual budget of around $100 million to

conduct research and innovation projects for the company. Its work focuses on reliability

and asset sustainment, energy efficiency, transportation electrification, environment and

emerging renewable energies.

Among other projects, we are testing electricity demand management strategies. Our

objective is to reduce winter peak demand

with voluntary measures that do not affect

customer comfort.

The Electric Circuit has expanded to 241 charging stations (240 V and 400 V) in 14 administrative regions, along with a 24/7 telephone help line and an interactive charging station locator service.

OPEN INNOVATION

We signed a three-year scientific collaboration agreement in the geothermal energy field with Québec’s INRS water, earth and environment research centre. The objective: continue research and validate the results of prelim-inary studies on the geothermal potential of four targeted regions.

$100 million

HEALTH AND SAFETY

Hydro-Québec studies its operations’ poten-

tial effects on human health and endeavors

to mitigate risks and inconveniences. These

may involve the changes mercury under-

goes in reservoirs, noise pollution caused

by our equipment in residential neighbor-

hoods, facility security and public safety, and

employee health and safety.

Acoustical engineer Franck Duchassin measures noise with a sound-level meter. Hydro-Québec checks noise in facilities located in residential neighborhoods regularly to preserve residents’ quality of life.

CARE AND CAUTION

With the arrival of spring, Hydro-Québec reminds the general public about the hazards of pruning trees near power lines, particularly through the print media.

GETTING CLOSE TO POWER LINES MEANS PUTTING YOUR LIFE AT RISK. IF A TREE NEEDS TO BE PRUNED OR CUT DOWN, ASK A PROFESSIONAL TO DO IT.

hydroquebec.com/trees

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FHYP13-034 Ann_Elagage_Gazette.indd 1 13-06-10 16:17

Olivier Francoeur and Steven Landry, automation electronics technicians, at work in Chute-Allard generating station.

HUMAN RESOURCES

Hydro-Québec employs more than 20,000 people in 150 work locations throughout the

province. We foster a healthy, motivating workplace that encourages employees to give

their best and contribute to the company’s success.

In 2013, we hired 626 new employees, 76% of whom were under age 35, and earmarked

2.8% of the payroll for training programs.

Seven of the eight collective agreements governing working conditions for Hydro-

Québec employees, 84.5% of whom are unionized, were renewed for a five-year period.

HYDRO-QUÉBEC WORKFORCE

Permanent workforce

17,861Temporary workforce

2,382Average age

45.6 years

2.8%

$31 million

2014

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2A

© Hydro-Québec Affaires corporatives et secrétariat généralReproduction authorized with reference to sourceLegal deposit – 2nd quarter 2014 Bibliothèque et Archives nationales du Québec ISBN 978-2-550-70256-6 ISBN 978-2-550-70257-3 (PDF)Ce document est également publié en français.This is a translation of the original French text.

On the cover Lac Maurice, in the Minganie region. Over the summer, Arctic char caught in lakes affected by development of the Romaine complex were transferred here. Our goal is to preserve the biological diversity of the region’s aquatic wildlife.

INVESTING IN THE COMMUNITY

Hydro-Québec supports numerous initiatives that are in the public interest. Our

community investments totaled $31 million in 2013. They take various forms: donations

and sponsorships, financial assistance under our Integrated Enhancement Program or

through the Fondation Hydro-Québec pour l’environnement, and support for colleges

and universities.

In terms of donations and sponsorships, Hydro-Québec encourages projects that support

its role as a good corporate citizen, always keeping sustainability in mind.

COMMUNIT Y INVESTMENTS IN 2013

Integrated Enhancement Program

$2,799,000

Other $785,000

Donations and sponsorships, including United Way/Centraide

$18,640,000

Fondation Hydro-Québec pour l’environnement

$760,000

Colleges and universities

$7,824,000